The latest FIRB report on foreign investment showed the US recorded a $10 billion increase in approved investment to $36 billion in 2017-18, with significant increases in real estate and the manufacturing, electricity and gas sectors.

China was the second largest source country with a $15 billion decrease in approved proposed investment to $23 billion.

The reduction in approved Chinese investment was due to falls across all investment sectors, especially property.

Chinese investment in real estate dropped to $12.7 billion in 2017-18 from $15.3 billion the year before, though China accounted for a quarter of foreign real estate investment.

Victoria gets the greatest share of Chinese residential investment, receiving 46 per cent of all approvals, with NSW in a distant second with 23 per cent, followed by Queensland’s 17 per cent. The data doesn’t track people who don’t need to request approval, which means NSW might be actually getting more investment.

Chinese buying is being impacted by several factors, local and international. There’s been the unexpected cancelling of promised mortgage loans by Australian banks, plus the higher foreign stamp duty taxes, along with Chinese government capital controls making it more difficult to move money from China, suggests Carrie Law, the boss of the Chinese property portal Juwai.

“We expect Chinese buying to be flat in 2019,” Law thinks.

I don’t think we ought regard the recent trend as permanent given tailwinds that will support Chinese buying, including the still-strong Chinese wealth growth.

There is the desire to get a bargain while the market is soft. Plus Law suggest there is a lack of investment opportunities in China, along with a possible shift in investment from the US to Australia due to any emerging trade war.

Additionally, the Yuan’s weakness is not holding back investment in property as there is an advantage in currency rates in favour of Australia compared to other major countries.

The Chinese also lack appealing alternative investments at home.

Interestingly, the Federal Government’s crackdown on residential properties held by foreigners in breach of the foreign investment rules uncovered just 131 now sold illegally held properties in 2017-2018. No nationalities were advised in the figure which was up slightly from the 96 ordered forced sales in 2016-17.